Business Improvement Districts (BIDs)

Business Improvement Districts (BID)

A BID is a business-led partnership that improves trading conditions in a high street or town centre - in a similar way that a shopping centre manager does in modern malls. BIDs vary in size but typically comprise a few hundred businesses clubbing together and backing a business plan that sets out a range of activities that are funded by a BID levy that is usually equivalent to 1% of rates (perhaps around £10 per week for each business. Typical activities include more cleaning, policing and/or marketing. Increasingly BIDs are aimed at cash saving strategies for businesses also - through collective purchasing - thereby striving to make the BID overall cost-neutral or even positive for businesses.

BID projects and services are selected by business for businesses. Typically they are additional cleansing and security to marketing and collective purchasing and working closely with local partners to achieve the improvements that businesses desire for an area. The benefits of BIDs cited by businesses are wide-ranging and include:

Increased footfall

Improved staff retention

Business cost reduction (shrinkage, crime, joint procurement)

Area marketing and promotion

Networking opportunities

A collective business voice and representation on issues affecting their area

Assistance in dealings with the Council, Police and other public bodies

Developing a BID

BID legislation was passed in 2003 in England and Wales, (and amended in 2004/5) and sets out:

Ballot – a BID is created following consultation and a ballot in which businesses vote on a BID Proposal (business plan for the area) and sets out businesses’ priorities for improvements for the area and area services and how the BID will be managed and operated. All businesses eligible to pay the levy are balloted and the ballot is run by the local authority. The ballot must be won on two counts: majority by number and by rateable value (this is designed to ensure that the interests of large and small businesses are protected) however there is no minimum turnout threshold.

An operating agreement is entered into between a BID and their local authority governing how the BID levy monies are collected and administered and passed over to the BID. Central to this are 'baseline agreements' – with the local authority and other service providers which guarantee the level of service provision in the area. These ensure that any services the BID provides are truly additional. These are legally binding once a ballot has been won and becomes the framework within which the BID will operate.

BIDs in operation

BID levy and funding - a BID is funded through the BID levy, typically 1-2% of a businesses’ rateable value with higher levies in locations with lower rateable values. The levy is mandatory for all eligible business occupiers however BIDs can choose to exclude certain businesses from paying the levy (and therefore from voting in the BID ballot). Usually BIDs exclude the smallest businesses and charities as the levy is too small to merit the collection costs. BIDs are often successful at attracting funding in addition to the BID levy such as property owners, the local authority and other public sector grant making bodies (as the BID levy can act as ‘match-funding’).

Governance and management – most BIDs are not-for-profit companies limited by guarantee and set out how they will be governed in their BID Proposal and Company Articles of Association and are governed by a board drawn from businesses in the BID area. BID management teams vary with the size and focus of each BID are generally kept small and focus on project delivery and administration. Performance measurement is important to demonstrate tangibly the improvements to an area and most BIDs commit to specific Key Performance Indicators (KPIs).

BIDs run for a maximum of five years and are renewed through a further ballot process. Evidence suggests that once a BID has been set up the vast majority will continuously renew.